Ethereum Technical Analysis: How to Trade

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4 de April de 2024

Ethereum stands as the second most prominent cryptocurrency in the crypto world, trailing behind Bitcoin.

It’s a crypto asset with diverse utilities beyond just accruing value over time.

Currently, Ethereum has given rise to numerous projects, ranging from Decentralized Finance (DeFi) to Non-Fungible Tokens (NFTs).

This makes the native token of the Ethereum network (ETH) essential for participating in these emerging projects, contributing to the rising demand and valuation of ETH.

To delve deeper into Ethereum, here’s an in-depth analysis and forecast of its chart. I’ll be updating it every 15 days, so you won’t miss a beat. 😉

 

Ethereum (ETH) Chart

This chart follows a very clear upward trend. Right now (04/04/2024), the price of Ethereum is around $3,300.

The price fell throughout 2022, but for the past few months, we’ve been witnessing a very strong upward trend, driving the price up by almost 160% since October 2023. What do you think is happening?

 

ethereum trend

 

Ethereum Technical Analysis

It’s crucial to read charts and understand their context, such as identifying supports and resistances, checking the chart trend, etc. What technical indicators does the Ethereum chart show today?

 

1- Supports and Resistances

Supports are below the price, and resistances are above. Where are the levels located on this chart?

technical analysis ethereum

As you can see, Ethereum had just broken through the $2,000 zone. From there, the price experienced a small pullback and began the significant last bullish surge we are currently experiencing, soaring like a rocket up to $4,000.

Have you been able to take advantage of this stretch?

2- Where to Enter and Where to Exit

If you were planning to manually exit the operation, you can forget about that idea. Placing your entry, exit, or even stop-loss price correctly is important.

You should consider what type of investor you are:

If you want to buy Ethereum for the long term (holder), you would wait for support zones to accumulate positions. You wouldn’t mind so much if the price oscillated. Now, if you enjoy trading (swing trader), you should be clear about where to place your entry, stop loss, and risk.

trading ethereum

In this case, considering the current price, we can identify a small entry pattern if the price pulls back to $3,000 or even if it returns to $2,500. Your initial target would be $4,000, and also keep a close eye on whether the price manages to break historical highs of $4,870.

As you can see on the weekly chart, the price could even return to the $2,000 zone, although it may be less likely. What do you think?

3- Weekly moving average

Surely, you’ve noticed that in the charts of the medium-term strategy (weekly charts), there’s always a moving average.

My advice is to define two clearly distinguishable colors for your moving average when it goes up or down. When the average constantly changes color, it indicates a sideways phase.

I’ve configured it as follows: The blue line indicates bullish moments. The red line outlines bearish phases.

ethereum moving average

The weekly average has been in the blue for 4 months, indicating an upward trend.

Currently, the price-value tension is extremely high, and as we mentioned in the previous point, a correction, even if small, to lower support levels is very likely. Do you see it clearly? What decision would you make?

 

4- Divergences

Divergence is the opposite of convergence. If converging means ‘moving towards the same point,’ diverging is ‘behaving in the opposite way.’

Therefore, in technical analysis, a divergence occurs when the price and an indicator exhibit opposite behaviors at their extremes. In other words, one rises while the other falls. Let’s analyze the Ethereum chart. What do you observe at first glance?

ethereum divergences

In the weekly chart, we still don’t have a divergence in one of the main indicators we usually use (MACD). Therefore, for now, there’s no signal of a trend change according to this aspect. However, we do notice that along with the price, the MACD histogram has started to support the upward movement, but we don’t see a divergence indicating that the price should start to fall. The indicator and price therefore coincide in the bullish continuation.

5- Price structure

Technical analysis serves to predict what the price will do.

We usually employ different techniques such as divergences with indicators, trendlines, patterns, etc.

But most importantly, it’s what the price ‘draws’ for us, known as the price structure. No asset moves in a straight line constantly. Sooner or later, there is a lot of tension in one direction, creating an imbalance between buyers and sellers that needs to be rebalanced.

This leads to the famous swings or impulses and retracements, forming structures of highs and lows in a certain direction.

Understanding how these movements are developing will provide clarity in detecting the trend of the asset you are observing. What’s happening with Ethereum?

price structure ethereum

I’ve marked on the weekly candlestick chart the bullish movement that has been ongoing since late 2023. You can observe how the bullish swings have been consistently occurring, establishing new higher lows and higher highs.

I’ve marked on the weekly candlestick chart the bullish movement it has been making since late 2023. You can see how the bullish swings have been occurring rigorously, leaving new higher lows and highs each time.

This movement has led the price to recover a good portion of the decline from 2022, and now it has managed to break through the $4,000 psychological zone with strength.

What might happen now? The interesting thing about this rise is that, thanks to this minor correction, it may gather enough strength to accumulate purchases and break upwards again.

The truth is, the chart looks very promising, but for now, we have to wait, and the key moment will be that breakout above $4,000 again. It’s crucial at these times not to succumb to FOMO (fear of missing out) and stick to your strategy. Wait for a return to the support zone to seek a better entry price.

6- Volatility

Volatility is often a sign that the price is accelerating in a certain direction. To gauge Ethereum’s volatility, pay attention to Japanese candlesticks. Keep in mind that interpreting candlesticks in trading is a matter of common sense.

volatility ethereum

The larger candles represent price drops, while the smaller ones indicate the opposite: calmer zones. In the chart, we’ve highlighted (in orange) the recent periods where Ethereum has experienced significant volatility.

We can see how this high volatility coincides with strong upward movements to break through the resistance levels of $4,000 and $3,600. Now, we observe a slowdown in the resistance zone, but we don’t see excessive downward volatility. We need to wait and see what happens next.

 

Forecast for Ethereum

If you’ve made it this far, it’s because you’re genuinely interested in knowing what’s going to happen with Ethereum.

I’m not a fortune teller, nor do I claim to be one, but it’s clear that in the short term, the most likely scenario is that the price will continue this strong upward trend towards $4,000 and possibly even historical highs. However, you should wait for the zones I mentioned earlier to establish a buying pattern and continue to ride the new bullish trend. At least, it seems to be the most probable scenario for Ethereum.

We’ll need to monitor it closely to see if a good buying opportunity arises or if the price reaches support and fails to hold the level. Remember to have patience and wait for the right moment to enter, rather than trying to anticipate it.

What would you do? How would you position yourself?

 

Ethereum Trading

As you already know, trading with Ethereum is not easy. Therefore, it’s crucial to educate yourself first to become profitable. Remember to store Ethereum in the safest ETH wallet in the world, Material Ether.

And, of course, don’t forget to follow the Bitcoin chart with me. Don’t buy just because the price reaches support; always wait for confirmation of the stop. If you have doubts or questions, feel free to join our Telegram channel.

For more in-depth analysis, check out our trend analysis of Bitcoin.

Eva Robledo - Material Bitcoin

Eva Robledo - Material Bitcoin

Eva Robledo has specialized in both professional marketing and advanced SEO. She is currently working on various projects related to the world of trading, cryptocurrencies, and finance. With extensive experience in content creation for these areas, among others, she brings valuable expertise to her endeavors.

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